Convenience Fee: Breaking Down the Hidden Cost in Food Delivery Apps

The Change in the Food Landscape: Breaking Down the Convenience Fee in Food Delivery Apps

Many restaurants have closed down because of the COVID-19. For the ones still operating, one lifeline available for them is food delivery.

If they choose to keep operating their business, most restaurant owners have no choice but to work with food delivery platforms to survive and make revenue.

But, there’s a catch: most customers remain oblivious of how many of these applications cost and prey on business owners as they charge restaurants for their services in the pretence of the customer convenience fee.

Food Delivery Exposed: The Hidden Cost Through Convenience Fee

Which? conducted a survey that investigated the costs of food from famous food delivery apps. It turns out that these convenient platforms are not one to be considered as the cheapest ways to purchase takeout food. The study compared the meal costs from five restaurants bought directly from the store and ordered from apps like Deliveroo, UberEats, and Just Eat.

Results highlighted that the takeaway cost 23% more on an app than walk-in purchases, with orders from Deliveroo the most expensive (31%), followed by UberEats (25%), while Just Eat orders are at 7%.

App Companies: “Commission Charges Are Fair”

In response, Deliveroo said they encourage restaurants to set the same delivery menu prices with the dine-in price they offer, and the commission charges are translated back into their business. The commission pays for the riders, customer services, and restaurant upgrades.

Meanwhile, Just Eat defends their rates as they align with their value delivery for their partners, which echoed the sentiments from UberEats that they are focused on providing the best food selection available for their customers.

However, this seems otherwise as most people surveyed by Which? complained that as they used delivery apps for food takeout and grocery delivery amidst the pandemic, there were late arrivals of food that sometimes were already cold or missing items on their orders.

Adam French, a “Which?” consumer rights expert, suggested that customers fancy food takeouts. They should be aware that the convenience they get from using delivery apps also comes with a hidden “convenience fee” cost.

Food Delivery: The Pricing Breakdown

As a consumer, understanding the cost of food you eat may be confusing. What does the convenience fee for food delivery look like? To know more about the premium price you are paying, here’s a quick breakdown for you:

You are paying for:

• The menu item, which is the actual food you want to eat.
• The Service fee, which is the fee for the company service.
• The Sales Taxes, which are taxes on your order based on local taxation laws.
• The Delivery Fee, which is the price you pay for having food delivery.

But, an article from The Wall Street Journal states that there are cases wherein the increased cost of delivery came from the restaurants themselves. These higher prices are said to be necessary measures to cover their restaurant expenses as these food delivery platforms cost them a big chunk of their revenue.

Despite costly prices, what makes food takeout platforms famous among consumers? Take a look below.

Why Consumers Choose Food Delivery Apps

Personalization and Customization

Instead of spending time and craning your neck in front of the menu, technology makes everything easier through one-touch food delivery apps. Most of the apps use AI functions, which suggest specific features perfect for different users, for example, lactose-intolerant individuals.

Diet and Nutrition

Better food options are attractive to consumers than fixed menus confined to a smaller pool of choices from individual restaurants.

These are more helpful to those with particular diets and need nutritional data and search functionality to count calories. Some apps also have in-app integrations with health and fitness-tracking apps and popular diet plans.

Pictures and Reviews

Food delivery apps also incorporate food pictures and customer reviews. Most restaurants also hire professionals for photographs, which helps a lot in attracting potential buyers.

Premium Offerings & Rewards

Similar to choosing Netflix and Spotify subscriptions, users can pay extra for premium food service, which allows them to rush orders and skip the long line outside. Instead of exposure to hazards of the COVID 19 virus, there is a feeling of comfort that the delivery driver brings items to your front door. Another loved feature is the loyalty awards given by these platforms, including discount vouchers or free delivery slips, which tap into the power of loyalty and rewards.

Conclusion: Is Convenience Fee Worth it?

Consumer behaviour shows that they are willing to pay premium fees for their convenience. Thus, the food industry is starting to take advantage of this.

Next time you consider ordering food for takeout, keep in mind that it will be naturally expensive, as you’re paying for someone to bring food to your door.

But if you’re trying to keep an eye on your spending and would like to support local restaurant owners more, before you add to the cart and check out on your favourite delivery app, consider the idea of picking your food up yourself instead.

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